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When this finance journalist was (briefly) a court typist, he had one favourite judge who often liked to say “a sword dangles above your head” when delivering sentencing remarks to those narrowly avoiding prison.
And to use that saying this week, ASIC is dangling a sword over the heads of two large ASX companies – firstly, QBE Insurance (ASX:QBE), and secondly, WA-based iron ore and lithium miner Mineral Resources (ASX:MIN).
So what’s going on? Let’s start with QBE.
This week (fun fact, we’re in week 43 of the year – there’s nine left) has seen ASIC take QBE to court with a lawsuit announced on Wednesday.
All in all, its alleging QBE fed dodgy information to customers on discounts, with QBE telling the people who paid its rent they could save money on general insurance products when, in fact, they could not.
Talk about taking a shit in your own nest.
“ASIC alleges QBE’s pricing model potentially eroded the discounts received by over half a million customers, in some cases to nil,” ASIC deputy chair Sarah Court said.
“The failure by insurers to deliver on pricing promises is a key priority for ASIC and we will continue to take action to hold insurers to account.”
The regulator is seeking civil penalties for QBE. The stock has since dropped 1.3% to $17.00/sh, according to CBOE live pricing at 10.30am Sydney time.
Then there’s Mineral Resources.
Wisetech (ASX:WTC) founder Richard White isn’t the only publicly listed man of scandal this week. There’s also MinRes founder Chris Ellison.
The controversial mining boss who is steeped in 1980’s mining sector rizz, if you will – think the kind of person who might suggest “you can’t have fun anymore,” or who would try and ban his workers from getting a coffee down the road – has now been accused of ripping off shareholders for years.
Go figure.
While MinRes isn’t the subject of a full blown ASIC lawsuit just yet, the regulator is now sniffing around the edges of the ever-unfolding situation, which was revealed by national mastheads over the weekend.
Earlier this week, Mineral Resources denied inappropriately using offshore accounts, but did admit to what effectively amounted to tax evasion – even going so far as to note Ellison’s apparent “regret” about the whole thing.
But traders might think the damage in MIN has already been done.
Shares were up 0.5% to $37.95/sh per CBOE live pricing at 10.30am Sydney time.
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